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Finding Stocks at a Fever Pitch

Look to CAPS pitches to find some of the best analysis of stocks.

The collective power of tens of thousands of investing minds is the driving force behind Motley Fool CAPS, the leading investor-intelligence community. Membership has grown to more than 100,000 investors: professionals, novices, and every level in between.

One of the service's unique features is that, as a member, not only can you rate a company on whether you think it will outperform or underperform the market, you can express why you think it will, in as much detail as you want. These analyses, or "pitches," can be as simple as, "This stock has a low P/E ratio," or as complicated as a multipage, footnoted thesis. In the context of the overall assessment of the stock, a pitch is another data point to consider.

Throwing strikesUseful analyses are those that give salient details about a company and its prospects -- on both the bull and bear side -- and the best ones earn recommendations. We call the investors who merit the most recommendations for their analyses our "pitch-writing superstars." Let's look at these top investors and some of their best recommendations to get a sense of what makes up strong analyses and winning investing.

pennysplants is not only a top pitcher who's received more than 660 recommendations for her pitches, she's also a top-rated All-Star with a 99.31 player rating. Here are a few of her most recent stock picks.

A shocking pitchpennysplants has a lot of company in her positive opinion of Yucheng Technologies, an IT services provider to the Chinese banking industry. Some 96% of investors rating the company think it will outperform. A similar percentage of All-Star CAPS investors rating it have endorsed its chances of beating the market. One is chouhung, who sees the expansion of point-of-sales (POS) systems as a major driver of future growth. Here's an excerpt:

[Yucheng Technologies] is unaffected by a world where credit liquidity over the next few years and rising commodity prices threaten most businesses. The Chinese financial technology market is expanding rapidly ... Company started as a provider of core banking IT systems, and has recently seen profit margins rise with web banking and expansion from national to regional and local banks. They ... are using profits ... to fund expansion into recurring revenue streams from web banking and POS (banking and credit card readers for convenience and retail stores) terminal installations, from which they get a percentage cut of the transaction.

While pennysplants sees Yucheng as a "roller coaster" stock, CAPS player jsbradley123 says that with the Chinese economy still in its early stages of growth, the ride with this one is just starting:

A very tiny percentage of the Chinese population is currently [using] banking technology (credit/debit cards, online banking, etc). Over the next 10 years, Chinese consumers are going to migrate toward credit/debit cards and more automated and online banking. Chinese banks are already gearing up for the changes and they are choosing [Yucheng Technologies] to help them.

Inside pitchesNow, just because a top-rated All-Star investor writes a pitch for a company, that's not cause to go out and buy or sell that stock. You need to perform your own due diligence. But it's worth considering what the proven pickers have said as you make your decision.

Step up to the batter's box of Motley Fool CAPS and make your opinions known. Because CAPS is a completely free service, throw as many pitches as you like at the stocks of your choice. You'll be helping your fellow investors make better investing decisions.

Author

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.